Archive for the ‘Reverse Auction’ Category
Thursday, September 2nd, 2010
I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.
Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.
This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Reverse Auction, Reverse Auction Procurement, Supply Chain Procurement
Monday, August 16th, 2010
Further more; your buyers can not save you as much as you might save if you used these types of tools. So when and if you do, make sure you measure and understand the true savings.
There are all sorts of e-procurement companies. Not all focus only on retail. However, all of them have web sites and all of the web sites tout savings that are all over the map. The question is what type of savings are they talking about. Following are some of examples.
1. Total low quote savings.
2. Total low quote company savings.
3. Total savings awarded companies.
4. Total realized savings.
5. Total savings versus budget period to date.
6. Total category savings.
7. Total savings year to date.
8. Total annual realized savings.
9. Total potential savings.
Companies really have to be specific as to what they ask each company relative to savings opportunities and make sure they have a formula in place for calculating savings over the course of the contract period for which the products are being sourced. There are all sorts of missed opportunities associated with actual event based low quote savings that can be created by lengthy review periods, delays in sample evaluation, extended award time periods, delays in contract dates, switching costs within the finance department, delays in shipping, specifications not being matched and specification creep that results in adding more expensive non specified items.
The bottom line is that you may have had low quote savings of 28% and that’s great. You may have had net realized savings of 18% and that’s great too. However if you don’t have a plan as to how you will measure savings you won’t know what caused the leakage and it can’t be fixed.
We look forward to and appreciate you comments.
Posted in B2b Reverse Auction, E-procurement, E-procurement Solutions, E-procurement Tools, Eprocurement Auction, Online Reverse Auction, Reverse Auction, Reverse Auction Procurement
Thursday, August 5th, 2010
Just because you need to buy a product or service does not mean that you will receive the optimal price for that product. For certain products there are better times to run e-procurement events and if you miss that opportunity by even a couple of weeks the lost savings could be astronomical.
Some consumers give this considerable thought when they buy products like cars, computers, televisions, furniture and even certain food products. Retail buyers should be doing the same. If you are the poultry buyer planning for Thanksgiving, you do not want to be buying your frozen turkeys in July and quite frankly if you buy them in March you are probably going to miss out on some savings. The same could be said for just about any type of fresh produce. You can certainly get everything in today’s world at any time of year, but there are better times to do it than others.
A couple of tangential examples that require careful thought would be landscaping services and snow removal services for store parking lots and distribution centers. The services for the most part may be provided by the same suppliers. The optimal time to source landscaping may be the month of March while the optimal time for sourcing snow removal services may be September. These months also mark the beginning and end of the respective service seasons for each service. Even though you may get the service from the same provider, keeping the services separate leaves the leverage with the retailer when you source the other service for the upcoming season. This is also the time when the suppliers are looking for business that will sustain them through the upcoming season as another winds down.
Make sure you ask your e-procurement solutions provider to assist you with the apropriate timing to source your goods and services.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Reverse Auction, Procurement Auctioning, Reverse Auction, Reverse Auction Procurement
Friday, July 30th, 2010
A reserve is also sometimes called the desired price, or a “qualification price”. Careful thought is required on the part of the retailer in determining their reserve price. Quite often retailers just rely on their existing or current price from their last contract. If careful thought is not given, this may in fact create an unreasonable expectation that results in less participation from prospective suppliers, particularly if the market has changed dramatically in an upward direction since the last award of business. You have to be very careful that once a reserve is met that suppliers will stop bidding because you have already indicated your desire price point.
In a reserve revere auction if the bidding does not reach the “reserve price”, the buyer is not obligated to award the business based on the results of the reverse auction. This can also add risk to the participation level of suppliers. However once the reserve price is met, the buyer is obligated to award the business to a participating supplier or group suppliers based on previously published auction rules. Most reverse auctions today include terms and conditions that protect the retailer from awarding the business whether the reserve is met or not. This author would caution that if you are just trying to collect prices to analyze market conditions, tell the suppliers up front. If you set a reserve plan to award the business.
Additional pricing considerations can be given to adding other price points or qualifiers in a reserve price reverse auction such as entering a market price. In the case of fuel, this may be from a price index such as OPIS, Platt or Gulf Coast. This information can be visible or blind to the supplier, but let’s the retailer compare a suppliers mark up strategies. This also offers a nice opportunity to calculate cost avoidance during an up market.
We don’t see reserve auctions to often anymore, but understanding the different types of formats and tools available to you and assessing them in your event setup for their potential impact can add to the quality of the data collected and the event itself.
We look forward to and appreciate your comments
Posted in B2b Reverse Auction, Online Reverse Auction, Procurement Auctioning, Reverse Auction, Reverse Auction Procurement
Friday, July 16th, 2010
A small retailer said to me last week that he did a form of reverse auction on his own. I asked how he accomplished this. The answer did not shock me, but I did chuckle a little. I’m glad he was a friend because he asked why I was smiling. The answer was that he sent out an email to three suppliers that he knew and asked for a price on a specific product. He told them in the email to make sure their price was there best offer and then called each once received and pressured them down with the threat of the other offers. We won’t get into the number of calls he had to make, the time it took to create the specification, the number of emails sent back and forth or lack of knowledge as to any new or additional sources of supply. We also won’t discuss the underlying psychology of a reverse auction and the tools that encourage quality bidding. The basic premise was solid and helped to reinforce why an automated system would out perform his results every time as well as provide a detailed audit trail.
At least in the example above, my friend was trying in his mind. What continues to concern this author is that many retail companies from lower tier I companies through all of tier II companies are not using any type of e-negotiation solution. Most of these solutions are relatively low cost hosted or SaaS oriented tools and available to them covering the entire P2P (procure to pay) process. In addition many of them belong to wholesalers that may use these tools themselves but don’t pass on all of the benefits to their customer.
I will continue to focus on this issue in the hope that if one company reads, watches, prints and uses any of this information and then executes because of it any or all of the following benefits may befall them.
1. Profits can and should improve
2. Quality can and should improve
3. Product Safety can and should improve
4. Environmental impact can and should improve
5. Prices can be compressed
6. New sources of supply can be found
7. Risk can be mitigated
8. Evergreening of contracts can be held in check
9. Existing jobs can be protected
10. New jobs can be created.
If these were the only reasons to try and get out the message as to the stunning effect that today’s e-procurement tools can have on an organization it would be enough. But we all know there are many more good reasons beyond the ten listed above.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Reverse Auction, Reverse Auction Procurement
Monday, June 21st, 2010
SafeSourcing has averaged over 30% savings for the entire time we have been in business across hundreds of millions in spend volume. This includes single event spends as small as $20K and as large event spends as large as hundreds of millions. You can rest assured that you can source all products and services with SafeSourcing regardless of how small or how large.
We believe there are very important reasons for these results. A few are as follows.
1. Our Event Template Library.
2. The SafeSourceIt™ Supplier Database with over 380,000 sources of supply.
3. Our customer services to assist buyers in building quality specifications quickly.
4. Event setup strategies that drive the best results.
5. Time to event.
6. Percentage of new suppliers per event.
So, here is the offer. Source any product or category regardless of the size of the spend and if you don’t save at least 15% THE EVENT IS FREE. Experience the difference for yourself in retail e-procurement leadership.
We look forward to and appreciate your comments
Posted in B2b Reverse Auction, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Company, Reverse Auction, Reverse Auction Procurement
Friday, May 7th, 2010
It hardly seems possible that we launched our company two years ago. At the time there were indicators for those paying attention of trouble in the global economy but know one had any idea just how bad it was going to get. In hindsight what a time to launch a company. When customers and business partners asked me why, my response was if you are doing what you believe in and the results you promise are true, then there really is no bad time to launch a business.
Our promise has been the same from day one, to reduce the cost of goods and services regardless of a company’s size or the size of the category being sourced. And, while doing so improve quality, safety and environmental focus. Today, two years later our customers will attest to the fact that we have held true to that promise.
Following is a short list of accomplishments that we are very proud of.
1. Over 700 educational blog posts relative to e-procurement issues of importance.
2. Over 1500 useful procurement related wiki terms and definitions.
3. Added an average of more than one new customer for every month in business.
4. Grew our supplier data base to greater than 380,000 retail suppliers
5. Sourced 100’s of categories from commodities to finished goods and services.
6. Sourced categories as small as $5K with savings > 30%.
7. Sourced categories as high as $80M.
8. Never held an e-negotiation event that did not result in savings.
9. Conducted every process in e-procurement including RFI, RFP and RFQ.
10. Installed our product in Asia in a multi lingual implementation.
11. Averaged over 24% savings over two years.
12. Developed a unique process for sourcing small spends for the retail mid market.
13. Grew our database to over a terabyte of data.
14. Helped companies source with environmental and social consciousness
15. Today released SafeContract™ a fully featured hosted Contract Management System.
To our customers thank you for your support. We endeavor to earn your business every day. To our business partners thank you for your guidance during a tough economic period. To the retail industry our goal is to be your best vehicle for reducing costs and improving earnings with an increased focus on corporate social responsibility.
Thank You.
Posted in B2b Reverse Auction, B2b Supply Chain, Business Sourcing, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Global E-procurement, Green eProcurement Practices, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Company, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Retail Supply Chain, Reverse Auction, Reverse Auction Procurement, Sourcing Safe Foods, Sourcing Safe Products, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
Friday, April 9th, 2010
These types of organization can go by many different names such as wholesaler, collective buyer, consortium, cooperative, share groups and more. They all have one thing in common. They consolidate purchasing volumes for a wide array of groups that may have very similar business structures, but for the savvy consortium can also be wildly different.
In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area.
Consortiums are also evolving and beginning to focus mixed markets where it makes sense. In general consortiums tend to be vertically focused such as a drug industry consortium with the members generally representing the drug industry only. However some consortiums are beginning to market them selves outside of their vertical to retailers or other companies who want to take advantage of learned expertise that the consortium possesses in the categories that are common across more than their own vertical and offer increased volumes. An example might be drug stores sourcing very similar products that health care organizations like hospitals source. Although this may seem like a stretch fro most, it is now very common within retail for non vertical specific players to work together.
Today’s advanced e-negotiation or e-procurement tools make it much easier to accomplish collective buying and aggregating outside of a consortiums initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers and other companies while also coordinating and participating in collaborative events from hundreds if not thousands of miles away. Suppliers now have an opportunity to earn business they could never compete for in the past.
Retailers should ask their collective buyers how they plan to make the use of these types of tools and what they have to offer in terms of introductions to other companies for increased volume.
We look forward to and appreciate your comments.
Tags: B2b Supply Chain, Business Sourcing, e-procurement solutions, e-procurement tools
Posted in B2b Supply Chain, Business Sourcing, E-procurement Solutions, E-procurement Tools, Procurement Solutions, Retail Supply Chain, Reverse Auction, Strategic Sourcing
Friday, April 2nd, 2010
Continuing from Part I of II Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?
The following scenario offers one example as to how the careful management of your suppliers and a little strategic thinking can drive the type of results you desire as well as a long term sustainable process.
Suppliers will almost always not be of the same size. This does not mean however that they are not of the same quality. Smaller vendors that have accepted your invitation will most likely bid early during your event and then drop out after the early rounds. These suppliers will most likely not agree to participate in the future as they consider their chances of winning the business unrealistic. This too is manageable however back to our first premise. Suppliers that finish first or second or your incumbent that may have been replaced will in most cases agree to participate again, but a lack of new competition will make the auctions less successful.
Thinking more strategically, an apparently logical question might be… If we only have six suppliers available how many should we invite to participate the first time and is more always better over the long run? Should we invite them all? Every company will answer this question differently. When considering the future, do we want successful early events or would we like a continual process improvement that drives continuous savings?
There are several possible solutions to consider. One scenario might be to only invite four participants to your first event. This will create a competitive environment for your reverse auction. After all it only takes two suppliers both interested in your business to drive quality results. Now back to our story. Let’s make the assumption that in twelve months or in the next purchasing cycle when you wish to repeat this auction that the two largest suppliers from the previous event agree to return. You could now invite supplier’s number five and six that were not included in the original auction. You have now created a competitive auction for the second year or purchasing cycle. An additional thought might be to not invite all of the largest suppliers to your first reverse auction, in order to manage the quality of your suppliers for future auctions. This type of critical thinking supports continual process improvement in e-procurement implementations.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-supply Chain, Online Reverse Auction, Retail Supply Chain, Reverse Auction, Reverse Auction Procurement, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
Thursday, April 1st, 2010
I was speaking to a senior vice president and head of a procurement organization yesterday that said what SafeSourcing really offers us is access to suppliers that we do not know exist or where to find them. He went on to say that his team and himself personally spend all day negotiating contracts and there are just many projects that they do not have the time to conduct the necessary research or solicitation of all the information including bids that SafeSourcing has ready access to.
A logical focal point for hosting a competitive reverse auction is to assemble all of your present vendors for a particular category that you hold in good standing. These would be suppliers from whom you have historically sourced products using traditional means. In general the principal is that the more vendors or suppliers you have participate, the greater your potential results.
However the above does also require strategic thinking because your company is beginning a process that you wish to use on a recurring basis. As such inviting the same suppliers again and again may initially seem to make sense. However this may not encourage the long term results you are looking for; and is a critical reason why it is important to have the most robust supplier data possible available for your regular review.
By way of an example to support the above let’s suppose you can only find six local suppliers for a particular category you wish to take to reverse auction. For the most part they will all show interest in participating in your auction the first time around. However a key issue to consider is what will encourage them to participate the next time and the time after that?
Please check back tomorrow for Part II of Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?
We look forward to and appreciate your comments
Posted in B2b Reverse Auction, B2b Supply Chain, E-supply Chain, Online Reverse Auction, Procurement Auctioning, Retail Supply Chain, Reverse Auction, Reverse Auction Procurement, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
